Thousands of sports clubs, scout groups and other community organisations are being barred from the best savings and energy deals. For these not-for-profit voluntary groups every penny counts, yet most are being treated like businesses and charged huge fees by banks.

There are more than 500,000 voluntary organisations in the UK. Of these, 180,000 are registered charities.

These organisations are often the
lifeblood of a community, providing a vital activity for adults and
children alike, putting on local shows and fetes, and even doing
community work that hard-pressed councils cannot afford to pay for.

They don’t make a profit and rely on
volunteers instead of paid staff. In some cases, these groups have
considerable budgets of many thousands of pounds, usually taken from
subscription fees or donations.

And the challenges of managing
accounts multiply if premises are involved — such as a Scout hut,
cricket pavilion, or an allotment shed, which may have running water and
power.

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Yet the volunteers who give hours of
their time are often forced to use expensive current accounts designed
for businesses which come with hefty fees. They are also stuck with
paltry savings rates because they cannot access normal High Street
accounts.

And they are treated differently when
it comes to paying for their energy. Treasurers are tied in to
long-term, fixed-price contracts in the same way as big businesses. Many
groups are also lumbered with paying more tax than they need.

Rip-off current accounts

In many cases, charities and voluntary
groups — no matter how much money they have — are made to take out
business accounts for their banking.

These can come with monthly charges of around £7.50, or charges for individual transactions such as £1 for paying in a cheque.

A good current account available to
charities, clubs and societies is the Norwich & Peterborough
(N&P) BS Business Gold.

It has no charges for deposits or
debits by cheque, cash, direct debit or standing orders and is free for
groups with a turnover of up to £100,000. But N&P has only 46
branches — which can be vital for groups that often deal in lots of cash
— and so many turn to High Street banks.

These can have an array of sneaky fees
and charges. For example, the HSBC Business Direct account has 18
months of free banking, but after this charges can soon add up.

There is a 2 per cent charge for
deposits and counter withdrawals; a 75p per cheque fee if more than 20
cheques a month are paid in; and £1 per cheque charge if more than 20 a
month are written.

HSBC does have a Community Account
specifically designed for ‘clubs, charities, societies and churches’
with none of these fees, but it does not come with a debit or even a
cash card.

Money Mail recommends: The N&P account, or the Co-Op’s Community Directplus account has no fees for basic credit and debit transactions.

The savings lock-out

Despite being run on a shoestring, many local groups do have times of the year when they have a surplus of funds.

For example, a year’s subscriptions
may be paid in one particular month, or there might have been a period
of fundraising. But banks are often unwilling to pay a decent return on
this money —and, understandably, most clubs don’t want to put their
savings in one individual’s name in case that person runs off with the
money.

Just as ordinary savers do,
not-for-profit groups should fill out form R85 from HM Revenue &
Customs to ensure their savings income is not taxed at source.

The Fair Investment Company
(www.fairinvestment.co.uk) lists the best accounts for charities, clubs
and associations. One of the most popular is the Scottish Widows Charity
7-Day Notice Account paying 1.85 per cent on balances of £50,000 or
above.

Alternatively, try Vernon BS’s
Charities and Clubs instant access account, which pays 2 per cent, but
accepts applications only from clubs and charities within 25 miles of
Stockport.

Monmouthshire BS’s Charities and Clubs
Direct instant access account pays 1.75 per cent — and this small Welsh
building society takes applications from anywhere in the UK via post or
phone.

If you have £10,000 to invest, one of
the higher returns is with Julian Hodge Bank, a small private bank based
in Wales. Its Extra High Interest account pays 3.05 per cent, but you
must give three months’ notice to access your money. This account is
available to individuals, as well as charities and clubs, but not
businesses. United Trust Bank, which specialises in property finance,
has a 12 Month Notice Account available only to registered charities
paying 2.5 per cent.

Business Moneyfacts, a magazine aimed
at financial advisers, lists every account available for charities and
clubs. Subscription costs £110 a year.

Savings Champion, a comparison
website, also offers a telephone service for any charity or club to find
the best account according to their needs. Call 0845 680 4964.

Traditionally many treasurers have
turned to the Charities Aid Foundation (CAF), itself a charity and also a
savings provider. However, charities earn just 0.2 per cent on balances
up to £250,000 with the instant access CAF account.

Money Mail recommends:
For instant access, Scottish Widows Charity Deposit Account pays
1.5 per cent on balances over £50,000 and 1.25 per cent on less. For a
one-year bond, Cater Allen, part of Santander, pays 2.3 per cent fixed
for a year on a minimum deposit of £50,000 (via Fair Investment
Company).

Sky-high energy bills

Most local groups and charities with
premises are forced to take business tariffs for their energy supplies,
where billing works in a completely different way to a residential
tariff.

Tariffs are normally fixed-rate and
long-term contracts, typically for 12 or 24 months. At the end of the
term the tariff can be rolled over on to a more expensive deal — unless
the community group remembers to switch.

But even this is not easy. Charities
have a specific window of opportunity when they can give their supplier
notice they are switching. This varies, with some suppliers allowing up
to 120 days before the contract expires, but others 60 or even just 30
days.

The easiest way to find the best deal is to use a free broker, such as Make It Cheaper or www.uswitchforbusiness.com.

Almost half of all charities and many
clubs are also failing to claim a little-known tax break which allows
them to pay a reduced rate of VAT of 5 per cent on fuel. This is costing
them an estimated £78 million a year.

And they can opt out of paying a Climate Change levy, typically costing £40 a year, which all businesses are made to pay.

Under the Finance Acts 1993 &
1997, any organisation whose energy is not used for business purposes at
least 60 per cent of the time can get a discount from the full rate of
VAT of 20 per cent. Ask your energy supplier to send a form.

Assuming an average energy bill of
£1,000 a year, VAT could be reduced from £167 to £41.67. You could also
claim a £498 refund for the past four years.

Once registered for the discount,
groups will be exempt from the climate change levy, too. You could also
claim a four-year refund for the levy.

Money Mail recommends: For more information on how to claim refunds, go to www.hmrc.gov.uk/charities

Avoiding council tax

Some buildings are exempt from business rates.

These include halls and buildings used for the training or welfare of disabled people.

Charities and amateur community sports
clubs can also apply for an 80 per cent discount on their rate bill for
their scout hut or cricket club. And they could be exempt from the full
amount, as the remaining 20 per cent is charged at the local council’s
discretion.

Money Mail recommends: Contact your local council to find out if your society is eligible for a discount.

‘We saved £1,000 on taxes’

A helping hand: Money saved on energy bills is put to good use by the Society for Abandoned Animals' volunteers

Heating bills for the Society for Abandoned Animals cost more than £6,000 a year.

The small Manchester-based charity houses 60 dogs, cats and rabbits in heated outbuildings.

Until recently, the charity was incorrectly paying the wrong rate of VAT at 20 per cent.

General manager Bob Gregson, 57, says: ‘When I realised that we should only be paying 5 per cent, I contacted the taxman and filled out various forms. They certainly don’t make it easy for you. However it was definitely worth doing, as it’s saved about £1,000 a year off our bills.

‘A lot of small charities are frightened off from claiming what’s theirs by all the bureaucracy.’

With vet bills increasing all the time, the money saved on energy bills is being put to good use by the charity’s 100 volunteers — including 22-year-old Vicky Godwin (pictured standing).

‘We recently found a four-month-old kitten that had been dumped outside in the freezing cold. Her vet bill alone came to £720,’ says Mr Gregson.